Fortune Brands Innovations (FBIN) DEF 14ADefinitive proxy

        520 Lake Cook Road, Deerfield, Illinois 60015

NOTICE OF ANNUAL MEETING

AND PROXY STATEMENT

Dear Fellow Stockholders:

We are pleased to invite you to the 2023 Annual Meeting of Stockholders (“Annual Meeting”) of Fortune Brands Innovations, Inc. (“Fortune Brands” or “the Company”) on Tuesday, May 16, 2023 at 8:00 a.m. (CDT) at the 520 Lake Cook Road, Deerfield, Illinois. The following matters will be considered at the Annual Meeting:

such other business as may properly come before the Annual Meeting.

Stockholders of record at the close of business on March 17, 2023, the record date for the Annual Meeting, are entitled to vote. For information about attending our Annual Meeting and for voting instructions, please see pages 59-63.

Important Notice Regarding the Availability of Proxy Materials

for the 2023 Annual Meeting of Stockholders to be Held on Tuesday, May 16, 2023.

This Notice of Annual Meeting and Proxy Statement and the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“Form 10-K”) are available at www.proxyvote.com.

Annual Meeting Information

Time and Date

Location*

Record Date

Tuesday, May 16, 2023 at 8:00 a.m. (CDT)

500 Corporate Center Starlight Cafe entrance 520 Lake Cook Road, Deerfield, Illinois

March 17, 2023

Agenda and Voting Recommendations

This Proxy Summary highlights selected information in this Proxy Statement and does not contain all of the information that you should consider in deciding how to vote. Please read the complete Proxy Statement carefully before voting. The following table summarizes the items that will be voted on at our 2023 Annual Meeting of Stockholders (the “Annual Meeting”), along with the Board’s voting recommendations.

See pages 59-63 for instructions on how to vote your shares.

BUSINESS HIGHLIGHTS

Our 2022 Transformation

2022 was a transformative year for our Company. It was also a challenging year for our Company and the market for our products. In the second half of 2022, the market experienced a sudden slow down, driven by higher interest rates and affordability concerns, which impacted Company results. In addition, the Company was also impacted by continued inflation and inventory pressures as we saw typical seasonality return to the business. Notwithstanding this challenging environment, our teams delivered a significant transformation of our businesses. We also took decisive actions to reduce our fixed cost base and to preserve our margin while maintaining investments in our key strategic initiatives, including our digital transformation, brand-building, and incremental capacity critical to our long-term growth. Our team executed the following transformational initiatives during 2022:

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Amidst a challenging external macro environment that negatively impacted our results, we believe that our teams’ strong performance executing our transformative initiatives, while reducing cost and increasing efficiency, has positioned the Company for long-term growth. Our 2022 results were:

The New Fortune Brands: Fortune Brands Innovations, Inc.

Fortune Brands Innovations is powered by our brands, innovation, and service that provides a unique value to our customers. Following the Separation, our product portfolio is focused on Water, Outdoors and Security, and is now more heavily weighted toward smaller ticket repair and remodel items and less exposed to market cyclicality. Our focus on innovative products and operations are drivers of our growth, productivity enhancement, and margin expansion. Our category management expertise and strong customer relationships enables us to provide greater consistency and pricing discipline.

Water Innovations		Outdoors & Security
Water Innovations is an industry leader with a powerful collection of water brands and focused on developing the future of water for today’s consumers. Water Innovations designs, manufactures, markets and distributes a growing portfolio of connected products, water management offerings, as well as consumer plumbing products, including faucets, showers, sinks and tubs.		The Outdoors & Security segment is focused on driving growth in the attractive outdoor living space with products engineered for performance, providing homeowners protection and security. The segment’s products include a collection of digitally connected security products, as well as exterior entryway, storm, security and screen doors; eco-friendly synthetic decking, cladding and railing; retractable screens and porch windows; safety and security devices.

We believe the Fortune Brands Advantage, a set of unifying capabilities leveraged across the Company, enables us to drive category management performance, simplify workstreams to better enable efficiencies, reduce costs by leveraging our global supply chain and enable the advancement of our digital strategy and capabilities.

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We continue to be driven by our culture of doing the right thing, as evidenced by our safety records, Environmental, Social and Governance (“ESG”) programs and our focus on innovating products that help address some of the world’s most pressing sustainability and safety issues.

BOARD OF DIRECTORS

SUCCESSION AND REFRESHMENT In accordance with the Board’s retirement age policy, the Board did not nominate Mr. Thomas to stand for re-election at the Annual Meeting. In anticipation of Mr. Thomas’ retirement from the Board, our Board welcomed Stephanie Pugliese as a Class III director in March 2023, following a thoughtful and comprehensive board succession planning process led by our Nominating, Environmental, Social & Governance Committee (the “NESG Committee”). Ms. Pugliese’s experience as a commercial and strategic business leader with oversight of digital and e-commerce businesses at Under Armour, Inc. and Duluth Holdings, Inc. brings valuable perspective to our Board. Ms. Pugliese is serving on our Audit Committee and NESG Committee.

The addition of Ms. Pugliese to our Board increases the Board’s diversity. Following Mr. Thomas’ retirement from our Board in May 2023, our Board composition will be:

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CORPORATE GOVERNANCE HIGHLIGHTS

Our Board is committed to maintaining a strong corporate governance program designed to promote the long-term interests of our stockholders and strengthen Board and management accountability. As a company, we are committed to core values that reflect a strong culture of integrity and accountability. These practices are reflected in our corporate governance policies, which are described in more detail on pages 12-20 of the Proxy Statement and highlighted below:

ENVIRONMENTAL, SOCIAL AND GOVERNANCE HIGHLIGHTS

Our Board of Directors is committed to overseeing our ESG initiatives throughout Fortune Brands. We dedicate significant resources toward developing innovative products that positively impact the lives of our consumers, and to produce these products using increasingly sustainable methods. We are committed to being a good corporate citizen by ensuring high safety standards for our associates, fostering an inclusive culture and giving back to our larger communities. We believe that the high standards by which we conduct our business will help us to build on our strengths and continually improve how we measure and monitor our progress on ESG-related initiatives.

Safety Safety is integral to Company culture and is a top priority, as reflected in our goal of zero safety incidents and through our efforts to create an injury-free workplace.

Diversity, Equity & Inclusion (“DEI”) We continued to advance our DEI strategy and initiatives during 2022. Recent additions to the Company’s leadership team shows the Board’s and management’s commitment to increasing representation of professionals of color and women. In addition, we expanded our employee resource groups and continued to offer unconscious bias learning programs throughout the organization during 2022. We are committed to making employment data publicly available to our stakeholders and will make our EE0-1 report available on our website later this year and following our next filing with the U.S. Equal Employment Opportunity Commission.

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Please see the resources available on our website at https://www.fbin.com/corporate-responsibility/esg-reporting. Our 2022 ESG Report will be available on our website in the second quarter of 2023. Information provided on the Company’s website is not incorporated by reference into this Proxy Statement.

COMPENSATION HIGHLIGHTS

PAY FOR PERFORMANCE Our executive compensation program is designed to reward named executive officers (“NEOs”) for the achievement of both strategic and operational goals that support the creation of long-term stockholder value. The vast majority of each NEO’s annual target compensation is at-risk because most compensation paid to our NEOs is dependent upon Company performance and/or stock price. In 2022:

Over the past five years, our stockholders have overwhelmingly supported our executive compensation program, with an average approval of approximately 93% of the votes cast for the Company’s annual say on pay vote.   COMPENSATION PRACTICES The Compensation Discussion & Analysis (“CD&A”) section beginning on page 23 includes additional detail on the following compensation highlights:

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Summary of Qualification of Directors

The Board has identified certain qualifications that are required of all directors. Additionally, the Board seeks to maintain a diverse set of skills, knowledge, experiences, backgrounds and viewpoints represented on our Board as a whole, but not necessarily by each individual director.

Qualifications Required of All Directors

Specific Qualifications, Expertise and Key Skills Represented on the Board

Election of Directors

The Board currently consists of 11 members and is divided into three classes, each having three-year terms that expire in successive years. Ms. Stephanie Pugliese was appointed by the Board to serve as a Class III Director effective in March 2023. The term of each director currently serving in Class III (Messrs. Nicholas I. Fink, A.D. David Mackay, David M. Thomas and Ms. Pugliese) expires at the Annual Meeting. The Board has nominated Messrs. Fink and Mackay and Ms. Pugliese for a new term of three years expiring at the 2026 Annual Meeting of Stockholders and until their successors are duly elected and qualified. Mr. Thomas will not stand for re-election and will retire immediately following the Annual Meeting. Mr. Thomas has served as a valuable member of our Board since 2011, serving in positions as non-executive chairman, lead independent director and chair of the NESG Committee over the course of his tenure. We thank him for his dedicated service to the Company and the Board. Following Mr. Thomas’ retirement, the number of directors will be reduced from 11 to 10 members.

Each of the nominees has consented to be named as a nominee and to serve as a director, if elected. If any of them should become unavailable to serve as a director (which is not now expected), the Board may designate a substitute nominee. In that case, the persons named in the enclosed proxy card will vote for the substitute nominee designated by the Board. Shares cannot be voted for more than the number of nominees proposed for re-election.

The names of the nominees (Class III) and the current Class I and Class II directors, along with their present positions, their principal occupations and employment during the last five years, any directorships held with other public companies or registered investment firms during the past five years, their ages and the year first elected as a director of the Company, are set forth below. Each director’s individual qualifications and experiences that contribute to the Board’s effectiveness as a whole are also described in the following paragraphs.

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The Board of Directors recommends that you vote FOR the election of each nominee named above.

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Fortune Brands is committed to maintaining strong corporate governance practices that are good for our stockholders and our Company. We are dedicated to maintaining these practices and upholding high standards of conduct.

Corporate Governance Principles

The Board maintains a set of Corporate Governance Principles which describe our corporate governance practices and address corporate governance issues such as Board composition and responsibilities, Board meeting procedures, the establishment of Board committees, management succession planning process and review of risks. The Corporate Governance Principles, which were enhanced in December 2022, most notably to include a Director Code of Conduct, are available at https://ir.fbin.com/governing-high-standards.

Director Independence

The Company’s Corporate Governance Principles provide that a majority of the members of the Board shall be independent directors. New York Stock Exchange requirements, as well as the Company’s committee charters, require that each member of the Audit, Compensation and NESG Committees be independent. The Board applies
the definition of independence found in the New York Stock Exchange Listed Company Manual in determining which directors are independent. When determining each director’s independence, the Board also considered charitable contributions made by the Company to organizations with which each director is affiliated. The Company’s Corporate Governance Principles were enhanced in 2022 to ensure that each independent director promptly discloses to the Board any existing or proposed relationships or transactions that could impact his or her independence.

Applying that definition, Messrs. Banati, Finan, Mackay, Morikis, Perry, Thomas, Waters and Mses. Hackett, Kilsby and Pugliese were affirmatively determined by the Board to be independent. Due to Mr. Fink’s employment with the Company, he is not considered independent.

Policies with Respect to Transactions with Related Persons

The Board adopted a Code of Business Conduct and Ethics which sets forth various policies and procedures intended to promote the ethical behavior of all of the Company’s employees, officers and directors (the “Code of Conduct”). The Board has established a Compliance Committee (comprised of management) which is responsible for administering and monitoring compliance with the Code of Conduct (other than monitoring director compliance which is the responsibility of the NESG Committee). The Compliance Committee periodically reports on the Company’s compliance efforts to the Audit Committee and the Board.

The Board has also established a Conflicts of Interest Committee (comprised of management) which is responsible for administering, interpreting and applying the Company’s Conflicts of Interest Policy, which describes the types of relationships that may constitute a conflict of interest with the Company. Under the Conflicts of Interest Policy, directors and executive officers are responsible for reporting any potential related person transaction (as defined in Item 404 of Regulation S-K) to the Conflicts of Interest Committee in advance of commencing a potential transaction. The Conflicts of Interest Committee will present to the Audit Committee any potential related party transaction. The Audit Committee will evaluate the transaction, determine whether the interest of the related person is material and approve or ratify, as the case may be, the transaction. In addition, the Company’s executive officers and directors annually complete a questionnaire on which they are required to disclose any related person transactions and potential conflicts of interest. The General Counsel reviews the responses to the questionnaires, and, if a related person transaction is reported by a director or executive officer, submits the transaction for review by the Audit Committee. The Conflicts of Interest Committee also reviews potential conflicts of interest and reports findings involving any director of the Company to the NESG Committee.

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The NESG Committee will review any potential conflict of interest involving a member of the Board to determine whether such potential conflict would affect that director’s independence.

Certain Relationships and Related Transactions

Since January 1, 2022, the Company did not participate in any transactions in which any of its directors or executive officers, any immediate family member of any of its directors or executive officers, or any beneficial owner of more than 5% of the Company’s common stock, had a direct or indirect material interest.

Anti-Hedging and Anti-Pledging Policy

The Company has a policy prohibiting directors and executives from hedging or pledging Company stock, including Company stock held indirectly, and from engaging in any derivative transactions designed to offset the decrease or increase in the market value of the Company’s stock.

Board Refreshment and Succession

The Board believes that Board refreshment and director succession are important to ensuring that Board composition is aligned with the needs of the Company and the Board. The Board also believes that continuity is critical to the effectiveness of the Board as a group over time and allows directors to develop a deeper understanding of the Company. The NESG Committee assesses the composition of the Board and aims to strike a balance between Board members with longer term service and newer members who bring a fresh perspective.

As part of the Board’s succession planning process and in anticipation of Mr. Thomas’ retirement from the Board following the Annual Meeting, the Board appointed Stephanie Pugliese as a Class III director. The Board’s strong commitment to succession and refreshment have been demonstrated over the last four years by adding five new directors. The majority of the director appointments over this period of time also demonstrates the Board’s commitment to increasing racial and gender diversity.

Director Nomination Process

The NESG Committee is responsible for, among other things, screening potential director candidates, recommending qualified candidates to the Board for nomination, assessing director independence and evaluating whether the Board and its committees are functioning effectively.

When identifying director candidates, the NESG Committee determines whether there are any evolving needs that require an expert in a particular field or other specific skills or experiences. When evaluating director candidates, the NESG Committee first considers a candidate’s management experience and then considers issues of judgment, background, stature, leadership, conflicts of interest, integrity, ethics, original thinking and commitment to the goal of maximizing stockholder value, as well as diversity of background and experiences of the Board as a whole. The Committee also focuses on education, professional experience and differences in viewpoints and skills. To align with the Company’s DEI initiatives and investor priorities, the NESG Committee instructed its search firm to include a diverse slate of candidates by including individuals that are diverse in gender and race when searching for new director candidates during 2022. Ms. Pugliese was identified as a potential director candidate through a third-party search firm. As a result of the Board’s succession planning process, the Board appointed an additional female director, increasing the Board’s gender diversity to 30% when taking into account Mr. Thomas’s planned retirement at the Annual Meeting.

With respect to the nomination of continuing directors for re-election, the individual’s contributions to the Board are considered. The Board generally will not re-nominate a director at the annual meeting of stockholders following his or her 72^nd birthday; however, the Board has the discretion to re-nominate a director after reaching age 72 if it believes that nomination is in the best interest of the Company’s stockholders.

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In connection with future director elections, or any time there is a vacancy on the Board, the NESG Committee may retain a third-party search firm to assist in identifying qualified candidates who meet the needs of the Board at that time. The Board is committed to the inclusion of diverse candidats when conducting a director candidate search; however, in considering candidates for the Board, the NESG Committee considers the entirety of each candidate’s credentials in the context of these standards.

It is the NESG Committee’s policy to consider director candidates recommended by stockholders, if such recommendations are properly submitted to the Company. Stockholders that wish to recommend an individual as a director candidate for consideration by the NESG Committee can do so by writing to the Secretary of Fortune Brands at 520 Lake Cook Road, Deerfield, Illinois 60015. Recommendations must include the recommended candidate’s name, biographical data and qualifications, as well as other information that would be required if the stockholder were actually nominating the recommended candidate pursuant to the procedures for such nominations provided in our Bylaws. The NESG Committee will consider the candidate and the candidate’s qualifications in the same manner in which it evaluates nominees identified by the NESG Committee. The NESG Committee may contact the stockholder making the recommendation to discuss the qualifications of the candidate and the stockholder’s reasons for making the recommendation. Members of the NESG Committee may then interview the candidate if the committee deems the candidate to be appropriate. The NESG Committee may use the services of a third-party search firm to provide additional information about the candidate prior to making a recommendation to the Board. For a stockholder to directly nominate a candidate for director, such stockholder must follow the procedures set forth in the Company’s Bylaws.

The nomination process is designed to ensure that the NESG Committee fulfills its responsibility to recommend candidates that are properly qualified to serve the Company for the benefit of all of its stockholders, consistent with the standards established under the Company’s Corporate Governance Principles.

Board and Committee Evaluation Process

To increase the effectiveness and provide an opportunity to improve processes and effectiveness, the NESG and the Chair of the Board facilitate an annual evaluation of the Board and its committees. The evaluation typically includes both an interview of each director relating to topics including the function and culture of the Board and its committee’s and performance, the Board’s oversight, responsibilities and resources. In 2022, the Chair of the Board led this process, the results of which were discussed with the Board.

Director Orientation and Continuing Education

The Board is briefed regularly on a variety of topics such as industry updates, corporate governance developments, the Company’s regulatory environment, applicable federal securities and state corporate laws, financial principles and standard accounting procedures. In addition, the Corporate Governance Principles provide for the Company to make external continuing education opportunities available to directors and reimburse costs incurred while furthering their education. New directors participate in comprehensive orientation sessions that are designed to familiarize them with the Company’s strategic plans, operations, financial information and governance, among other relevant topics. This orientation program is considered an essential part of the director onboarding process. New director orientation is tailored to complement the background of the new director. These activities are designed to ensure that the Board remains knowledgeable about the most important issues affecting our Company and its businesses.

In 2022, several directors participated in external continuing education focused on a variety of topics, including corporate governance, ESG developments, leadership succession planning, the lead director function, audit committee functions, and enterprise risk management and innovation.

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Communication with the Board

The Board and management encourage communication from the Company’s stockholders. Stockholders who wish to communicate with the Company’s management should direct their communication to the Chief Executive Officer or the Secretary of Fortune Brands at 520 Lake Cook Road, Deerfield, Illinois 60015. Stockholders, or other interested parties, who wish to communicate with the non-management directors or any individual director should direct their communication c/o the Secretary at the address above. The Secretary will forward communications intended for the Board to the Chairman of the Board, or, if intended for an individual director, to that director. If multiple communications are received on a similar topic, the Secretary may, in his or her discretion, forward only representative correspondence. Any communications that are abusive, in bad taste or present safety or security concerns may be handled differently.

Board Leadership Structure

The Board of Directors has determined that is in the best interests of our stockholders to have an independent, non-executive chair serve as the Company’s Board Chair at this time. This leadership structure aids the Board’s oversight of management and allows our Chief Executive Officer to focus primarily on his management responsibilities. The non-executive Chair has the responsibility of presiding over all meetings of the Board, consulting with the Chief Executive Officer on Board meeting agendas, acting as a liaison between management and the non-management directors, including maintaining frequent contact with the Chief Executive Officer and advising him or her on the efficiency of Board meetings, facilitating teamwork and communication between the non-management directors and management, as well as additional responsibilities that are more fully described in the Company’s Corporate Governance Principles. In addition, the Company’s non-executive Chair facilitates the Board’s annual performance assessment of the Chief Executive Officer.

The Board does not believe that a single leadership structure is right at all times, so the Board periodically reviews its leadership structure to determine, based on the circumstances at the time, whether other leadership structures might be appropriate for the Company. The Board has been and remains committed to maintaining strong corporate governance practices and appropriate independent oversight of management. If, in the future, the Board appoints an executive chair or any other non-independent director as chair, the Board will elect an independent director to serve as the Lead Director. The duties of the Chair of the Board and Lead Director are further described in our Corporate Governance Principles.

Executive Sessions

Pursuant to the Company’s Corporate Governance Principles, non-management directors of the Board are required to meet on a regularly scheduled basis without the presence of management and are led by the Non-Executive Chair. During 2022, Ms. Kilsby led these sessions. In addition, Board committees also meet in executive session periodically as deemed appropriate by such committee.

Risk Management

The responsibility for the day-to-day management of risks lies with the Company’s management team; however, the Board has an active role, as a whole and also at the committee level, in overseeing the strategy and process for managing the Company’s risks. Management regularly reviews information regarding the Company’s business strategy, resource allocation, credit, liquidity and operations, talent development, succession and DEI, as well as the risks associated with each, with the full Board. The Company’s overall risk management program consists of periodic management discussions analyzing and mitigating risks, an annual review of risks associated with each of the Company’s businesses and an annual review of risks related to the Company’s compensation programs and practices.

The Audit Committee oversees management of the Company’s financial and operational risks. In addition, the Audit Committee oversees the enterprise risk management program, which identifies both external risks (i.e., economic) and internal risks (i.e., strategic, operational, financial and compliance, including climate-related),

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assesses and ranks these risks according to the likelihood of occurrence and the potential monetary impact. It also assesses the Company’s plans to mitigate such risks. Annually, management identifies and assesses the enterprise risk management program, which the Audit Committee reviews. Cybersecurity-related risks and certain climate-related risks, such as physical risk to our operations and supply chains and commodity price volatility resulting from severe weather events caused climate change and new regulations designed to protect the environment, are some of the external risks assessed in the enterprise risk management program. Management also provides the Audit Committee with quarterly updates on the Company’s risks. The Company has a comprehensive enterprise-wide cybersecurity program aligned to the U.S. Department of Commerce National Institute of Standards and Technology Cybersecurity Framework industry standards and maintains security risk insurance coverage to defray the costs of potential information security breaches. The Company conducts automated online training twice a year for its employees and mock phishing campaigns on a regular basis throughout the year. The Company’s cybersecurity team provides regular updates to our senior executives and typically reports twice a year to the Audit Committee on the status of the Company’s security posture and our efforts to identify and mitigate cybersecurity risks. In 2022, the Company’s chief information officer also reported to the full Board on the Company’s cybersecurity programs and risk mitigation efforts.

The Compensation Committee is responsible for overseeing the management of risks relating to the compensation paid to the Company’s executives and the Company’s compensation plans. Annually, the Compensation Committee’s independent compensation consultant conducts an assessment of the risks associated with the Company’s executive compensation policies and practices. The compensation consultant conducts a more extensive review of all of the Company’s broad-based compensation incentive arrangements every few years. In 2022, the compensation consultant conducted a review of the Company’s executive compensation arrangements. For more information about that assessment see “Compensation Risks” below.

The NESG Committee manages risks associated with the independence of the Board, potential conflicts of interest of Board members and the Company’s corporate governance structure. In addition, the NESG Committee oversees the Company’s ESG programs, initiatives and related risks, which include the Company’s environmental, health and safety, DEI, philanthropy, global citizenship and other social and governance programs and policies. Management reports to the NESG Committee on the Company’s safety programs and statistics as well as the Company’s DEI strategy and goals.

While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about all of the risks described above. The Board’s assignment of responsibility for the oversight of specific risks to its committees enables the entire Board, under the leadership of the Chair and the Chief Executive Officer, to better monitor the risks of the Company and more effectively develop strategic direction, taking into account the magnitude of the various risks facing the Company.

Compensation Risks

The Compensation Committee’s compensation consultant, Willis Towers Watson (“WTW”) conducts an annual assessment of the risks associated with the compensation policies and practices used to compensate the Company’s executives and reports on the assessment to the Compensation Committee. In 2022, the Company’s compensation consultant analyzed the elements of executive compensation to determine whether any portion of executive compensation encouraged excessive risk taking and whether incentive designs include appropriate risk-mitigation provisions. After reviewing the compensation consultant’s analysis, the Compensation Committee concluded that none of the Company’s compensation arrangements encourage excessive risk taking and are consistent with the structure and design of other companies of similar size and industry sector. The Company utilizes the following risk-mitigating design features:

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As described in our CD&A, compensation decisions are made using a combination of objective and subjective considerations designed to mitigate excessive risk taking by executives.

Meeting Attendance

Each director attended more than 90% of the total meetings of the Board and committees of the Board of which the director was a member during 2022. The Board and its committees held the following number of meetings during 2022:

Pursuant to the Company’s Corporate Governance Principles, all directors are encouraged to attend the Annual Meeting of Stockholders. All of the Company’s then-serving directors attended our 2022 Annual Stockholder Meeting.

Board Committees

The Board has established an Audit Committee, a Compensation Committee, an Executive Committee and an NESG Committee. A list of current Committee memberships may be found on the Company’s website at https://ir.fbin.com/committees-and-charters. The Committee memberships as of the date of this Proxy Statement are set forth below:

 An “X” indicates membership on the committee.

 A “C” indicates that the director serves as the chair of the committee.

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Audit Committee

The Audit Committee’s primary function is to assist the Board in overseeing the (i) integrity of the Company’s financial statements, the financial reporting process and the Company’s system of internal controls; (ii) the Company’s compliance with legal and regulatory requirements; (iii) independence and qualifications of the Company’s external auditors; (iv) performance of the Company’s external and internal auditors; and (v) the Company’s enterprise risk management program, which includes oversight of cybersecurity related risks.

Each member of the Audit Committee (Messrs. Banati, Mackay, Morikis, Perry, Thomas and Waters and Ms. Pugliese) is financially literate. In addition, Messrs. Banati, Mackay, Perry, Thomas and Waters each have accounting or financial management expertise and is an audit committee financial expert as defined in Item 407(d)(5)(ii) and (iii) of Regulation S-K under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As required by its charter, each Audit Committee member has also been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual.

Compensation Committee

The Compensation Committee’s primary function is to assist the Board in attracting and retaining high quality leadership by (i) developing and critically reviewing the Company’s executive compensation program design and pay philosophy; and (ii) setting the compensation of the Company’s executive officers in a manner that is consistent with competitive practices and Company, business segment and individual performance.

As required by its charter, each member of the Compensation Committee (Messrs. Banati, Finan, Mackay and Morikis and Mses. Hackett and Kilsby) has been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee has (i) served as one of the Company’s officers or employees, or (ii) had a relationship requiring disclosure under Item 404 of Regulation S-K.

Compensation Committee Procedures

The Compensation Committee directs management to prepare financial data to be used by the Compensation Committee in determining executive compensation. In addition, members of the Company’s human resources department assist in the preparation of executive compensation tally sheets and historical information describing compensation paid to executives, program design and plan provisions, and the Compensation Committee’s independent consultant provides market data for use in determining executive compensation. The Compensation Committee is presented with recommendations from management and from the Committee’s independent compensation consultant as to the level and type of compensation and related program designs provided to the Company’s executive officers. Members of the Company’s legal department provide the Compensation Committee with general advice on laws applicable to executive compensation.

The Chief Executive Officer attends meetings of the Compensation Committee, except for portions of meetings where his performance or compensation is being discussed. The Chief Executive Officer’s feedback on each officer’s performance is essential in the Compensation Committee’s determination of the officer’s salary, target annual incentive and long-term equity compensation determinations. See pages 23-35 of this Proxy Statement for more information about how the Compensation Committee determined the executive officers’ compensation in 2022.

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Compensation Committee Consultant

WTW has served as the Compensation Committee’s outside compensation consultant since 2020. In 2022, WTW received fees of approximately $586,000 for executive compensation-related services provided to the Compensation Committee. WTW also provided certain human capital, benefits and corporate risk and brokering services to the Company for which WTW received approximately $1.28 million. The Compensation Committee did not review or approve these additional services provided by WTW to the Company because they are of the type directly secured by management in the ordinary course of business. In their capacity as outside compensation consultant, WTW reported directly to the Compensation Committee and provided the following services and information to the Compensation Committee:

Executive Committee

The Executive Committee has all the authority of the full Board, except for specific powers that are required by law to be exercised by the full Board. The Executive Committee may not amend the Company’s charter, adopt an agreement of merger, recommend actions for stockholder approval, amend or repeal the Bylaws, elect or appoint any director or remove an officer or director, amend or repeal any resolutions of the Board, fix the Board’s compensation, and unless expressly authorized by the Board, declare a dividend, authorize the issuance of stock or adopt a certificate of merger.

Nominating, Environmental, Social and Governance Committee

The NESG Committee’s primary functions are to (i) provide recommendations to the Board with respect to the organization and function of the Board and its committees; (ii) recruit, identify and recommend qualified potential director candidates and nominees; (iii) review the qualifications and independence of directors and provide recommendations to the Board regarding composition of the committees; (iv) develop and recommend to the Board a set of corporate governance principles; (v) oversee the process of the evaluation of the Board and management; and (vi) oversee the Company’s environmental, social and governance programs, policies and related risks. The NESG Committee also makes recommendations to the Board regarding the level and composition of compensation for non-employee directors and grants annual equity awards to non-employee directors.

As required by its charter, each member of the NESG Committee (Messrs. Finan, Perry, Thomas and Waters and Mses. Hackett, Kilsby and Pugliese) has been determined by our Board to be independent as such term is defined in the Exchange Act and the New York Stock Exchange Listed Company Manual.

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Other Corporate Governance Resources   The Company’s Corporate Governance Principles, the Company’s Code of Business Conduct and Ethics and the Company’s Code of Ethics for Senior Financial
Officers are available on the Company’s website at https://ir.fbin.com/governing-high-standards. The charters of each committee are also available on the Company’s website at https://ir.fbin.com/committees-and-charters. A copy of our ESG report and other ESG resources are also available on the Company’s website at https://www.fbin.com/corporate-responsibility.

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Fortune Brands is committed to attracting and retaining qualified and experienced directors to contribute to the Board’s effectiveness and the Company’s goal of maximizing stockholder value. To accomplish this, the Company maintains a non-employee director compensation program that consists of cash retainers and Company stock. Below is a description of the 2022 non-employee director compensation program.

No changes were made to the non-employee director compensation program during 2022. In May 2022, each non-employee director received an annual stock grant that was determined by dividing the dollar value of the annual stock grant ($145,000) by the closing price of the Company’s stock on the grant date ($73.94), rounded to the nearest share. Accordingly, 1,961 shares of Company stock were granted to each of the then serving non-employee directors.

Due to the Separation and the establishment of a new compensation peer group, the NESG Committee, with the assistance of WTW, assessed the Board’s compensation program, its elements and amounts paid. Based on this assessment, effective beginning in January 2023, the Board eliminated committee membership fees, increased the annual cash retainer to $120,000 per year and increased the value of the annual equity retainer to $160,000.

In connection with the Separation, Ms. Hackett was credited with one notional share of MasterBrand stock under the MasterBrand non-employee director compensation plan for every notional share held in Ms. Hackett’s deferral account under the Company’s Non-Employee Director Deferred Compensation Plan, to reflect her continuing role as a director of the Company and as a director of MasterBrand.

Director Stock Ownership Guidelines

To further align the Board’s interests with those of our stockholders, the Board maintains Stock Ownership Guidelines for non-employee directors. The guidelines encourage non-employee directors to own Company stock with a fair market value equal to five times the annual cash retainer (for 2022, $500,000) and allow directors five years from the date of election to meet the guidelines. Shares owned directly by a director, the director’s spouse,

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minor children sharing the same home and any trust in which the director is a trustee with voting and/or investment power, as well as any shares that have been granted to a director, but receipt has been deferred pursuant to the Company’s Deferred Compensation Plans, are counted towards ownership. For information about the beneficial ownership of the Company’s securities held by directors and executive officers, see “Certain Information Regarding Security Holdings” on pages 57-58.

* Although Mr. Fink serves as member of the Board, he does not receive any additional compensation for such service. Ms. Pugliese is not included in this chart as she did not serve as a director of the Company for any portion of 2022.

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This CD&A describes the Fortune Brands’ executive compensation program and explains how the Compensation Committee made compensation decisions for the following NEOs in 2022^*:

Nicholas I. Fink		Patrick D. Hallinan**		Cheri M. Phyfer		Sheri R. Grissom		Hiranda S. Donoghue
Chief Executive Officer		Executive Vice President & Chief Financial Officer		Executive Vice President, Group President		Executive Vice President, Chief Human Resources & Transformation Officer		Executive Vice President, Chief Legal Officer & Secretary

This CD&A is divided into the following sections:

EXECUTIVE SUMMARY

Business Highlights

During 2022, the Company and its management team executed on key transformative initiatives in the face of a challenging economic environment. Despite a slowing market due to interest rate increases and inflation, we successfully completed the Separation of our Cabinets business, rebranded our Company and reorganized our business model under a centralized leadership team. While executing on our transformative initiatives, we also reduced our fixed cost base and maintained investments in our key strategic initiatives, including our digital transformation, brand-building, and incremental capacity, which are viewed as critical to our long-term growth. Our 2022 results were:

We believe our compensation program is designed to and links compensation to performance as reflected by the impact of the economic environment on our 2022 financial results and compensation earned by NEOs in 2022. We believe that the actions taken by the leadership team in 2022 have positioned the Company to continue to grow and create long-term value for our stockholders. We also believe that our compensation program and the goals used within our program continue to incentivize and reward performance.

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2022 Compensation Highlights

The Company’s compensation programs and practices are designed to pay for performance and to align management’s interests with those of the Company’s stockholders while attracting, motivating and retaining superior talent to lead our Company. The Compensation Committee believes that our compensation program incentivizes high performance by providing a significant amount of compensation as equity, utilizing both short-term and long-term incentives tied to Company performance and balancing fixed (base salary) and variable (annual cash incentive and equity) compensation. The material components of our 2022 executive compensation program are summarized in the following chart:

In connection with the Separation, equity awards were adjusted to preserve the intrinsic value of the awards held by the NEOs, with unvested PSAs being converted into time-based RSUs based on projected performance results calculated based on actual performance from the beginning of the applicable performance period through the end of the fiscal quarter immediately preceding the Separation (or September 30, 2022) and expected performance through the remainder of the applicable performance period. Each outstanding equity award remains subject to continued employment through the vesting date of the original awards. Mr. Banyard’s outstanding equity awards were converted into equity awards of MasterBrand, with his unvested Fortune Brands PSAs converting into MasterBrand RSUs based on the same methodology described above.

The Compensation Committee approved a change to the metrics used in our annual incentive plan program by aligning to the use of the same consolidated corporate wide metrics for all executive officers in order to support the Company’s restructured organization beginning in 2023.

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2022 NEO Annual Total Target Compensation

The following chart summarizes annual total target compensation awarded to each NEO in 2022:

RESULTS OF THE 2022 SAY ON PAY VOTE

		The Compensation Committee and Board value the input of our stockholders. 92.2% of the votes cast at our 2022 Annual Stockholder Meeting were in support of the Company’s executive compensation program.   Over the past five years, our stockholders have overwhelmingly supported our executive compensation program, with an average approval of approximately 93% of the votes cast for

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PHILOSOPHY AND PROCESS FOR AWARDING NEO COMPENSATION

Philosophy of the Executive Compensation Program

Our executive compensation program is designed to reward NEOs for the achievement of both short-term and long-term financial, strategic and operational goals that lead to the creation of long-term stockholder value. The 2022 executive compensation program was designed to:

2022 Compensation Peer Group and Market Data

The Compensation Committee uses compensation data from a group of similarly sized peer companies to evaluate our compensation arrangements (the “Peer Group”). With the help of the Compensation Committee’s consultant, each year the Committee reviews the Peer Group and decides whether any changes should be made. As recommended by WTW, the Compensation Committee did not make any changes to the Peer Group used to evaluate 2022 compensation decisions. The Peer Group consisted of the following companies:

2022 Peer Group
• Allegion plc		• Lennox International Inc.		• RPM International Inc.
• A.O. Smith Corporation		• Masco Corporation		• The Sherwin-Williams Company
• Ball Corp.		• Mohawk Industries, Inc.		• Snap-On Inc.
• Borgwarner Inc.		• Newell Brands Inc.		• Stanley Black & Decker, Inc.
• Dover Corp.		• Owens Corning		• Trane Technologies plc
• JELD-WEN Holding, Inc.		• Parker-Hannifin Corp.		• Whirlpool Corporation
• Leggett & Platt, Incorporated		• Pentair plc
FORTUNE BRANDS vs. PEER GROUP (1)
(1)  Reflects 2021 fiscal year-end results, which were used at the time the Peer Group was compiled.

WTW provided the Compensation Committee with market data to consider in setting each element of compensation of the NEOs for 2022. This market data primarily consisted of revenue-size-adjusted general industry data received from WTW, supplemented with peer group proxy data.

The Compensation Committee believes that compensation decisions are complex and require a deliberate review of Company performance, peer compensation levels, experience and impact of individual executives, and individual performance. In determining executive compensation, the Compensation Committee considers all forms of compensation and uses tools – such as tally sheets and market data – to review the value delivered by each component of compensation. When evaluating total target compensation, the Compensation Committee generally strives to set NEO compensation around the 50^th percentile of the market data. The Compensation Committee may, however, determine that it is appropriate for total target compensation or any particular element of compensation to exceed or fall below the 50th percentile of the market data for an NEO. The factors that might influence the amount of compensation awarded include market competition for a particular position, the strategic importance of the position, retention considerations, an individual’s performance, possession of a unique skill or knowledge set, proven leadership capabilities and internal pay equity.

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2023 Compensation Peer Group and Market Data

In 2022, the Compensation Committee determined that the Peer Group would need to be adjusted to align with the Company’s refined market and peers following the completion of the Separation. The criteria used to evaluate and select the 2023 Peer Group included comparable sized companies (based on revenue) that were more aligned with our business strategies, such as companies that manufacture household products and provide specialized consumer services, including security and alarm services, and companies with strong brand recognition and technology enabled products. The criteria used to evaluate and select the 2023 Peer Group also eliminated businesses with less relevance to our Company’s business strategies, such as those in the auto parts and equipment and specialty chemical industries. With the assistance of WTW, the Compensation Committee approved the following Peer Group for use in connection with 2023 compensation decisions:

Evaluating NEO Performance

All NEOs undergo an annual performance appraisal. For the evaluation of our CEO, the Board conducted a formal evaluation of the CEO’s performance against certain financial, operational, business strategy (including advancing the Company’s ESG and DEI strategies) and personal development objectives established at the beginning of the year. Progress on such objectives is regularly reviewed throughout the year with the Board. At the end of the year, the Board discusses the CEO’s accomplishments and achievement of the goals with the CEO and in executive session without the presence of the CEO. Following the annual performance review, the Compensation Committee utilizes market data provided by the compensation consultant to set the CEO’s annual total target compensation based on the results of the performance assessment. For the other NEOs, the CEO reviews and evaluates each of their performance against strategic, financial and operational goals established at the beginning of the year and then presents his evaluations to the Compensation Committee. The Compensation Committee reviews the CEO’s recommendations and market data from the compensation consultant and then independently sets each of the other NEO’s annual total target compensation.

Maintaining Best Practices

The Compensation Committee maintains policies to protect the interests of our stockholders and follows commonly viewed best practices in corporate governance. The chart below summarizes these policies.

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TYPES AND AMOUNTS OF NEO COMPENSATION AWARDED IN 2022

Pay-at-Risk Compensation

As part of 2022 annual target compensation, the Company provided both fixed (base salary) and variable (annual bonus, PSAs, RSUs and stock options) compensation to the NEOs. The vast majority of annual target compensation is at risk because the compensation that is actually paid is dependent upon the Company’s performance or stock price. As a result, the amount of compensation actually paid to an NEO may significantly vary from the NEO’s target compensation.

The following charts show each element of 2022 annual target compensation, including the mix of short-term and long-term incentives, as well as the amount of pay-at-risk for the CEO and the average for the other NEOs. These charts illustrate annual target compensation.

As shown in the charts above, a significant portion of the compensation granted to our NEOs was equity and pay-at-risk. Equity grants represented 72% of Mr. Fink’s annual total target compensation and 56% (on average) of the other NEOs’ annual total target compensation for 2022. 88% of Mr. Fink’s annual total target compensation for 2022 was pay-at-risk and 75% (on average) of the other NEOs’ annual total target compensation for 2022 was pay-at-risk.

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2022 Compensation

Base Salary

Base salaries provide a fixed level of cash compensation and are paid in order to attract and retain our NEOs. The Compensation Committee sets each NEO’s base salary to be appropriate and commensurate with the NEO’s position, experience and performance.

For 2022, the Compensation Committee increased the annual base salaries for each NEO, other than Ms. Donoghue, to better align with competitive market data and in recognition of each individual’s prior year performance. Ms. Donoghue’s initial base salary was determined at the time she joined the Company in December 2021 based on the competitive market data, the compensation received from Ms. Donoghue’s prior employer and to be comensurate with her experience. As a result of the Company’s transformation and reorganization, Ms. Phyfer was promoted to a newly created position, Executive Vice President and Group President, where she is responsible for the commercial businesses, brands, innovation and product development across our organization. In connection with her promotion to this position in September 2022, she received an increase to her base salary of 12% to bring her compensation in line with market data for a position of similar scope. Below are the 2022 and 2021 annual base salaries for each NEO, effective as of December 31st of the applicable year (or, in the case of Mr. Banyard, his last day of employment with the Company):

Annual Cash Incentive

The Compensation Committee believes that annual cash incentive awards (“bonus”) reinforce a pay for performance culture because the payment is based on the Company’s financial and operational results. Each year, the Compensation Committee sets a percentage of base salary to determine each NEO’s bonus payout at 100% of target.

The Compensation Committee increased the percentage of base salary used to determine the 2022 bonus awards for Messrs. Fink, Hallinan and Banyard and Mses. Phyfer and Grissom from the percentage of base salary used to determine their 2021 bonus awards. The increases were made to better align with market data and for internal pay equity purposes. The Committee did not make any adjustment to the target bonus opportunities for any of the other NEOs. Ms. Donoghue’s annual incentive target was established at the time she joined the Company in December 2021 based on the competitive market data and the Company’s internal pay practices. In connection with Ms. Phyfer’s promotion in September 2022, her target percentage was increased from 85% to 90% to bring her compensation in line with market data for a position of similar scope. As a result, Ms. Phyfer’s 2022 annual cash incentive award was pro-rated to reflect the portion of the year in which her target was set at 85% and 90%, respectively. The target annual bonus opportunities for each of the NEOs in 2022, reflected as a percentage of base salary, were:

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Bonus payouts under the annual cash incentive awards were based on the achievement of applicable performance goals and could have ranged from 0% to 200% of target. To establish challenging performance goals under the annual cash incentive program, the Compensation Committee reviewed the target performance goals and actual results for awards paid in 2021, as well as the 2022 expected growth rate in the home products market, the Company’s three-year operating plan and key assumptions relating to share gains, pricing, material inflation and productivity. For 2022, the Compensation Committee approved the following performance metrics and weighting for bonus awards:

The bonus awards for each of Messrs. Fink and Hallinan and Mses. Grissom and Donoghue were subject entirely to the satisfaction of corporate performance metrics described above, while the bonus awards for each of Messrs. Banyard and Finley were subject entirely to the satisfaction of their respective business segment performance metrics set forth above. Ms. Phyfer’s award was calculated using a target bonus opportunity of 85% of base salary and based on Water Innovations business segment performance results for the period between January 1, 2022 and September 6, 2022 and a target bonus opportunity of 90% of base salary and based on corporate performance metrics for the period between September 6, 2022 and December 31, 2022.

The Compensation Committee believes that the performance measures chosen for the 2022 bonus awards focus executives on maximizing sales and profitability for the Company. The following table sets forth the minimum (0% payout), target (100% payout) and maximum (200% payout) financial performance measures, the actual performance results, the percentage payout and the amount paid to each NEO for the 2022 annual cash incentive awards:

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Long-Term Equity Awards

The Compensation Committee believes that equity compensation reinforces a pay for performance culture and aligns the interests of management with those of our stockholders. Annually, the Compensation Committee sets a target equity award value and determines the types of equity to award.

The 2022 annual equity award for NEOs consisted of 50% PSAs, 25% RSUs and 25% stock options. In setting 2022 target long-term equity award values, the Compensation Committee considered competitive market data and the individual performance of each NEO. The Compensation Committee increased the target long-term equity award values granted to all NEOs, other than Ms. Donoghue, from the 2021 target long-term equity award value in recognition of prior year performance. In addition, the award values for Messrs. Fink and Hallinan and Ms. Phyfer were increased to better align with market data for similar positions. Ms. Donoghue’s 2022 target annual equity value was established at the time she joined the Company in December 2021. Below are the target equity award values for 2022 and 2021 for each NEO:

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In anticipation of Ms. Grissom’s planned retirement, her equity award was granted solely in RSUs that were scheduled to vest on December 28, 2022, subject to her continued employment through such date, in order to support a smooth transition of her role by retaining Ms. Grissom through 2022. As the Company’s Separation and reorganization projects developed over the second half of the year, Ms. Grissom’s retirement was delayed in order to assist the Company and to have her lead its transformation and reorganization projects.

Performance Share Awards: PSAs awarded to the NEOs in 2022 were awarded to be settled in shares of the Company’s common stock based on earnings before interest, taxes, depreciation and amortization (“EBITDA”) (weighted 75%) and return on invested capital (“ROIC”) (weighted 25%) for the three-year performance period from January 1, 2022 to December 31, 2024, with payouts that could range from 0% to 200% of the target award based on performance. Under the original terms of the PSAs, if the Company failed to achieve the minimum performance threshold, none of the PSAs would vest. See below for further information regarding the treatment of the 2022 PSAs, along with all other outstanding PSAs for prior performance periods, in connection with the Separation.

The Compensation Committee based the performance goals on EBITDA and ROIC because it believes that these metrics incentivize management to grow earnings and aligns the interests of management with our stockholders. The Compensation Committee believes that awarding PSAs with a cumulative three-year performance goal drives long-term sustained growth and, as a result, management is rewarded if the long-term growth goals are exceeded. In establishing performance goals for PSAs, the Compensation Committee considered the Company’s strategic operating plan, the expected three-year compound market growth rate, as well as key assumptions relating to share gains, pricing, material inflation and productivity.

RSUs and Stock Options: The Compensation Committee believes that both RSUs and stock options incent NEOs to increase stockholder returns and align the interests of NEOs with stockholders. RSUs granted to the NEOs generally vest in three equal annual installments, assuming the NEO remains employed through each annual vesting date. RSUs serve as a long-term retention tool in a cyclical business because the NEO must remain employed with the Company through each of the three annual vesting dates to receive all of the shares. As noted above, Ms. Grissom’s 2022 RSU grant vested on December 28, 2022, subject to her continued employment through such date. The Compensation Committee believes that RSUs represent at-risk compensation since their value is linked directly to share price.

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Stock options allow an NEO to purchase a specific number of shares of Company stock at a fixed price (i.e., the share price set on the grant date). The 2022 stock options vest in three equal annual installments, assuming the NEO remains employed through each vesting date, and expire ten years from the grant date. The Compensation Committee believes that stock options are performance-based and at-risk because the NEO only realizes value to the extent the Company’s stock price increases after the grant date.

Impact of the Separation on Company Equity Awards

Consistent with the treatment of other Fortune Brands employees, each outstanding RSU and stock option held by the NEOs (other than Mr. Banyard) immediately prior to the Separation was adjusted to preserve the intrinsic value of the awards. Each outstanding RSU and stock option remain subject to continued employment through the vesting date of the original awards. Consistent with the treatment of other employees who remained with MasterBrand, Mr. Banyard’s outstanding RSUs and stock options were converted into RSUs and stock options of MasterBrand in a manner intended to preserve the value of the awards prior to the Separation.

The Compensation Committee assessed the actual performance achievement of each outstanding PSA performance cycle through September 30, 2022 and determined that it was appropriate to recognize the performance achieved through such date given the proximity to the conclusion of the 2020-2022 and 2021-2023 PSA cycles and that such performance would have been materially above target had the cycles completed. The Compensation Committee determined that it would be more appropriate to reward performance by converting all three outstanding PSA cycles based on projected performance rather than attempt to meaningfully adjust the goals or convert the PSAs to RSUs at target performance. As a result of this assessment and as permitted under the terms of the underlying equity plans and award agreements, all unvested PSAs were converted into time-based RSUs based on projected performance results calculated based on actual performance from the beginning of the applicable performance period through the end of the fiscal quarter immediately preceding the Separation (or September 30, 2022) and expected performance through the remainder of the applicable performance period had the Separation not occurred. Each PSA converted into an RSU, which will vest in accordance with the original vesting schedule. Consistent with the treatment of other employees who remained with MasterBrand, Mr. Banyard’s outstanding PSAs were converted into MasterBrand RSUs using the same methodology described above.

At the time of the Separation there were three outstanding PSA performance cycles: 2020-2022; 2021-2023 and 2022-2024. The PSA performance achievement approved by the Compensation Committee based on performance through September 30, 2022 and projected performance through the end of each performance period for each outstanding performance cycle was:

Based on the approved achievement, the PSAs for all outstanding cycles were converted into the following number of Company RSUs:

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Benefits

Retirement

All of the NEOs are eligible for retirement benefits through the Fortune Brands Innovations Retirement Savings Plan (the “Qualified Savings Plan”), a tax-qualified defined contribution 401(k) plan. The Compensation Committee believes that the Qualified Savings Plan benefits are consistent with competitive pay practices and are an important element in attracting and retaining talent in a competitive market.

In addition to the Qualified Savings Plan, the Company provides non-qualified retirement benefits for contributions that would have been made under the tax-qualified plan but for limitations imposed by the Internal Revenue Code (the “Code”). Please see the narratives and the “2022 Nonqualified Deferred Compensation” table on pages 41-42 of this Proxy Statement for further information regarding these retirement benefits.

The Company froze pension plan benefit accruals in 2016 and as a result none of the NEOs are entitled to a benefit under these plans. Mr. Hallinan retained a retirement benefit that accrued while he was an employee of MasterBrand from 2005 through 2008, which was transferred to MasterBrand as a result of the Separation.

Severance

The Company has Agreements for the Payment of Benefits Following Termination of Employment (the “Severance Agreements”) with each NEO. Under the terms of the Severance Agreements, each NEO is entitled to severance benefits upon a “qualifying termination of employment” (i.e., termination by the Company without “cause” or by the NEO for “good reason”) or in the event of a qualifying termination of employment following a change in control.

The Compensation Committee believes that it is appropriate to provide NEOs with the protections afforded under these Severance Agreements and that doing so helps the Company remain competitive with market practices and attract and retain superior talent. The Compensation Committee also believes that these Severance Agreements promote management independence and keep management focused on the Company’s business in the face of any potential change in control events.

All of the Severance Agreements contain “double-trigger” change in control provisions, which means that there must be both a change in control of the Company (or applicable business) and a qualifying termination of employment (i.e., termination by the Company without “cause” or by the NEO for “good reason”) before any enhanced benefits can be paid following a change in control. The NEOs are not entitled to any tax gross ups under the Severance Agreements, including those related to the change-in-control related excise taxes imposed under the Code.

In connection with the Company’s reorganization, Mr. Finley’s position was eliminated and he stepped down as an executive officer of the Company on September 6, 2022, continuing to serve the Company in an advisory capacity until December 31, 2022. In connection with his departure, Mr. Finley became eligible to receive separation benefits under his Severance Agreement following his separation of employment on December 31, 2022. In connection with his separation, the Compensation Committee also approved an extension of the post-termination option exercise period for Mr. Finley’s outstanding stock options for 24 months.

Neither Mr. Banyard nor Mr. Hallinan were eligible to receive severance benefits under their Severance Agreements with the Company in connection with their resignations from the Company.

See the “2022 Potential Payments Upon Termination or Change in Control” table on page 43 below for further details regarding the Severance Agreements, including a quantification of the benefits to be received by Mr. Finley in connection with his departure from the Company.

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Perquisites

All NEOs were provided with an executive health program that provides all NEOs with annual medical examinations and cybersecurity privacy protection services. The Company also provides certain broad-based plans, which are generally available to employees such as matching on charitable contributions and company product purchase programs. In 2022, the Company provided a limited number of perquisites to the NEOs, which included limited use of Company aircraft by Messrs. Fink and Hallinan (the costs of which were reimbursed to the Company based on the cost of a first class airplane ticket for each passenger on a personal flight).

Policies

Clawback Policy

The Company has a policy that allows it to recoup all or part of annual cash incentives or PSAs if there is: (1) a significant or material restatement of the Company’s financial statements covering any of the three fiscal years preceding the grant or payment; or (2) a restatement of the Company’s financial statements for any year which results from fraud or willful misconduct committed by an award holder. An executive’s unvested RSUs and PSAs and both unvested and vested but unexercised stock options are forfeited and cancelled in the event an executive’s employment is terminated for cause under the terms and conditions of these awards.

Stock Ownership Guidelines

The Company maintains stock ownership guidelines for NEOs and other Company executives, which require them to hold a number of shares equal to a multiple of their annual base salary. The ownership guidelines are as follows:

Executives have five years from the date of hire or date of promotion to acquire the requisite amount of stock and are required to hold 50% of net shares acquired from the vesting of PSAs and RSUs until the ownership guidelines are met. All of the continuing NEOs currently meet their applicable multiple threshold or fall within the time period allowed to meet the multiple threshold under the stock ownership guidelines.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on the review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Compensation Committee

A.D. David Mackay, Chair

Amit Banati

Irial Finan

Ann F. Hackett

Susan S. Kilsby

John G. Morikis

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